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Are you an ‘average young Australian’ when it comes to personal finance?

Although I don’t believe in ‘keeping up with the Jones”, now and then I do like to compare how I am tracking financially to the average Australian, whether it is salary wise, savings or spending. It helps to give me perspective and motivation and is an interesting benchmarking exercise. So here are some average balances I have compiled, to help Gen Y Australians see how they’re tracking. I’ve compiled the balances from several sources, since they all differ due to the underlying assumptions, inclusions or exclusions in the data. The numbers I have included cover averages Australia wide, in addition to breakdowns by age.

Average Salary

The ABS says the average full-time wage is $74,724 before tax (Source: News.com.au). Average household incomes have been pegged at $145,400 as at September 2014 according to the Australian Bureau of Statistics (Source: Business Insider). Alternatively, as at July 2015, Trading Economics cites the average pre-tax wage in Australia as $1,128.70 which is $58,692 annually.

Workers with the lowest average weekly earnings were those aged 15–19 years ($559 for full-time workers and $172 for part-time workers) while those with the highest average weekly earnings were aged 35–44 years ($1,440 for full-time workers and $594 for part-time workers). Millennials (aged 25 to 34) earned an average weekly salary of $1,200 before tax.

Average Savings

In December 2014, 29% of households reported that they had cash savings of $1000 or less according to ME Bank’s latest Household Financial Comfort Report. 56% reported that they had cash savings of $10,000 or less and 16% reported that they had cash savings of between $10,000 and $30,000 (source: Infochoice). On a net basis, West Australians have an average of $58,410 of savings in the bank, compared to $38,198 in South Australia, $36,151 in Victoria and $35,953 in NSW (source: The Australian).

The average Australian is saving $427 a month, according to a report from Suncorp Bank. The report named Generation Y, those between 25 to 34 years old, as Australia’s best savers, saving $533 per month, 12.7% of their personal income (source: MyWealth Commbank). Gen X (35-49) are saving the least with a median savings balance of $8,060 compared to $14,377 for Gen Y (18-34) and $17,744 for baby boomers (50-64) (Source: News.com.au).

Average spending

For a lone person under 35, the average spend per week was $869. Couples under 35 spent $1,429 per week whereas couples with kids under the age of 5 spent $1,484 per week (Source: Moneysmart). Interestingly, this report shows children are not overly costly in the first 5 years, however it doesn’t consider the loss of income from one parent. As at 2010, Moneysmart published the following weekly breakdown of average Australian spending. Does it stack up similarly to your biggest cost of living expenses?

$223 on housing

$193 on transport

$161 on recreation

$59 on household furnishings

$52 on holidays

$44 on clothing and shoes

$32 on eating out

$20 on health practitioners

$14 on audiovisual equipment

$13 on household appliances

The average credit card balance in Australia is around $3,200, and the average balance which is accruing interest is a little over $2,000. More than a third of Aussies pay back their balance before the expiry of the interest free period and therefore pay very little for the use of the card (Source: The Age). A RateCity report shows 42% of young people under the age of 24 have between $10,000 and $30,000 of personal debt, not including a mortgage. 34% of people under the age of 34 had applied for a credit card online in the first half of 2014. This is a disturbing quote from the article; “More than half (56%) of Generation Y’s with a credit card have never had a $0 balance on their credit card in the last year, and 63% are not aware what interest rate they are paying”.

Mortgages and HECS/FEE HELP

When it comes to buying homes, a report by realestateview.com.au has found 57% of first home buyers are now in their 30s or 40s (Source: ABC News). “So what we used to see was first timers would be somewhere between the age of 20 and 30 years old, but certainly our research has shown over half of them are now aged between 30 and 49 years old.” RFI’s Australian Mortgage Council data found the average age of a first-home buyer has crept up from 31 in 2009 to 34 in 2013 (Source: News.com.au). ABS figures in 2011 reveal that the average Australian household with a mortgage paid $1,800 a month in mortgage repayments, up from $1,300 five years earlier. Figures by mortgage broking company Australian Finance Group, shows that the average size of new mortgages in December 2014 was $444,000 (Source: News.com.au).

As at 2011, the average debt under the Higher Education Loan Program is $13,288, with male students averaging $14,316 and female students $12,597, according to data from the Tax Office (Source: Daily Telegraph). A Curtin University report notes that under current arrangements, HECS-HELP debt is typically between $10,000 and $30,000 for a three year bachelor degree, with average HELP debt (all HELP loans including HECS) equal to $16,800 in 2013-14.

Average Superannuation

According to the Australia Bureau of Statistics in 2010, the average superannuation balance for Australians between 25 and 29 was between $4,000 and $7,000. The average balance for Australians between 30 and 34 was around $27,000. In general, the average super balance for men still adding to their accounts is $71,645 while women hold an average of just $40,475. The average retirement payout (determined by the average savings for those aged 60-64) was $112,600 for women and $198,000 for men, which is nowhere near the amount needed to fund retirement (Source: Australian Super).

I recommend using a few of the superannuation projection tools available online. Whilst they shouldn’t be taken as gospel, they are very useful for assessing how you are tracking (even at this age) towards retirement. If you aren’t saving or contributing enough, now is the time to start squirreling a little away, in order to make the most of compound interest. This article in the Sydney Morning Herald painted a compelling picture of how compound interest can work for you; “If you are 20 years old, every dollar you save today will be worth $21.30 by the time you are 65 (and that’s adjusted for historical inflation). If you’re 30, each dollar saved today will be worth $10.63 by age 65.” Amazing!

So, how are you tracking? Do you aim to achieve the average or have you got a different approach altogether?

That Career Girl

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5 comments

Wow, I’m shocked at how low all of those metrics are. We are 33 year olds and our household stats are way above all of those in every category (and have been for a long time). Maybe we are doing better than I had thought!

Glad to hear it! It’s a good feeling to see that hard work/sacrifice is paying off however it is a shock to see how average Australia is faring. I am ahead when it comes to salary, I have average savings, no credit cards at the moment, first home bought at 26, average spending and above average super (approx 81k). These metrics reaffirm I need to control my spending better, boost my savings… And educate my young sisters about the perils of credit cards. I should have added average mortgage balance and HECS/HELP debt to this list though. My HECS/HELP debt is unfortunately very high at around 65k.

I find this information fascinating although it’s tough to find good like-for-like comparisons. The best source I’ve found is the HILDA survey, which gathers really interesting information on Australian income and wealth, but unfortunately they keep the detailed numbers hidden away from the general public like us.

If you’re interested, I’ve mashed together data from a couple of sources to create a calculator that compares your net worth with other people at the same age and income (e.g. 28-year-old Australian earning $120k per year): http://www.moneybootcamp.com.au/?page_id=11

I wonder if some of the differences in savings are a result of whether or not the younger people have bought houses yet. The gen x’s with minimal savings may have deposited their savings into real property ie. they have more equity.